Marketing and Finance: the Peanut Butter and Jelly of Direct Marketing
Note from Jim: Today’s column is dedicated to the memory of my father and often business partner, Stephen Gilbert CPA, 8/7/17 to 4/27/09.
Over the years, I've written many times about the importance of financial acumen as a core competence of successful direct marketers.
Many people seem to think direct marketing is about killer creative, or campaign management, or even great customer service. But to me, it always starts with the finances.
If I’m writing a circulation plan, it starts with the break-even analysis, right on down to the list and list segment level. Each segment of my housefile has a P&L and breakeven attached to it, then each drop, each season and each year.
I do this in advance, even three to five years in advance, using historical numbers. And I do it before each mailing to measure the success or failure of every campaign I do. Remember, past performance predicts future behavior!
I’m also nuts about other financial analyses, such as lifetime value, squinch (square inch for measuring catalog space usage), cash flow, balance sheets, etc.
To this day, I'm amazed at how many people I work with, smart people, still want to practice direct marketing by the seat of their pants. To me, marketing just doesn’t make much sense without financial understanding. Too many direct marketing companies think they're brands. Too many direct marketers think they "know" what their customers want and, hence, perform no analysis.
There was a time in my career — when I started my first business, a publishing company — that I had no interest in the numbers. My father, a certified public accountant, took care of that, leaving me to market, sell and manage the day-to-day operations. I made many mistakes working that way, which my dad was quick to point out. So I learned, and learned quickly, thanks to him.